The United States is well positioned to attract continued cross-border capital to the real estate sector once uncertainty regarding the ‘fiscal cliff’ is resolved. Australia is already seeing a pick-up in cross-border investment and even some markets on the periphery of continental Europe could start to become attractive to investors in 2013, according to CBRE’s top regional economists.
“The United States continues to attract capital from real estate investors due to its liquidity and diversity of Grade A investments,” said CBRE’s Head of Americas Research, Asieh Mansour.
In a new edition of Watch This Space (click HERE), the CBRE video series which looks at the major trends affecting commercial real estate, Ms. Mansour, EMEA Chief Economist Peter Damesick and Nick Axford, Head of Research for Asia Pacific noted the following trends:
- In the U.S. investors continue to favor multi-housing development because of the cyclical recovery, low vacancy rates and a long-term secular change in way Americans consume housing. Millennials and Gen Y households want the flexibility of living in rental units while retiring baby boomers are selling their homes and becoming renters — a trend seen increasingly in major urban centers.
- Cross-border capital flows to the U.S. have been driven by property’s ability to generate steady returns on a risk-adjusted basis. As of Q3 2012, US property on an unlevered basis has returned 11%. Much of the strength has been in the multi-housing and retail sectors, followed by industrial and office.
- In EMEA minimal economic growth is anticipated in France, the UK and Germany, where forecasts are pointing to a 1% increase in GDP. GDP contraction is anticipated in Spain, Italy, Portugal and Greece. However, 2013 should see stronger economic growth in Poland, Russia and Turkey, as well as the smaller economies in Eastern Europe and the Nordic countries.
- In Asia-Pacific the three most attractive countries for investment are China, Japan and Australia. Australia has been one of the more popular cross-border destinations for investment capital from Asia, North America and Europe. Although the flow of capital is slower than before the financial crisis, there has been a pickup over the last 3 to 6 months from global and European sources.
According to Mindy Korth, an executive vice president and investment properties specialist in CBRE’s Phoenix office, cross-border investment activity in the Phoenix area has come primarily from Canada. A trend she expects will continue in 2013.
“There is a limited supply of investment-grade assets on the market in Canada, and what’s available is priced higher than similar properties in metro Phoenix,” said Korth. “Although sales prices and volume are expected to rise in metro Phoenix next year, it is not expected to diminish the flow of Canadian buyers into the area.”
CBRE’s Watch This Space video program delivers authoritative comment on the issues and news in the global commercial real estate industry. The videos take a look at the major trends affecting the sector, with expert commentary from CBRE and industry professionals.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.